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LEGAL CHAT

Key role for Confirming Party in rights transfer

Photo: P. V. Sivakumar

Right way: When it comes to rights transfer, draft the documents properly.

It is likely that while perusing deeds, you may come across certain parties referred to in the deed as ‘Confirming Party’. A Confirming Party also executes the document just like the transacting parties. He or she may have also joined the presentation of the document, before the Registrar of Assurances concerned, during the time of registration of the deed. One may not be clear on what is the role of a Confirming Party to a deed. At times, there could be certai n implications on the document as well as the stamp duty and registration charges. Further, the reason that a Confirming Party figures in the document is often hazy to the parties concerned. In this discussion, we can see the typical situations in which a party has to join the execution of a document as a Confirming Party.

A conveyance is a document under which property and other rights are transferred from one person to another. The document has to be properly drafted to provide an effective transfer of property. In a typical transfer, there are obviously at least two parties, namely, the transferor and the transferee. Depending on the nature of the document and the issues that one seeks to address, further parties may be necessary to effectuate the transfer. A Confirming Party is one such party.

A Confirming Party may join the execution and registration of a deed of transfer for the purposes of better assuring the title of the transferee. By the execution of the document concerned, the Confirming Party signifies that such party does not have a contrary interest to that of the transferor or the transferee. The Confirming Party may sign the deed in token of acceptance of the fact that the contemplated transaction cannot be questioned by the Confirming Party, who may otherwise claim to have an interest over the property or the transaction. The Confirming Party may also join execution of the document in confirmation of the fact that he or she has no interest at all in the property or the transfer.

The Confirming Party is brought in to make sure that the interest of the person, usually the transferee, is property established beyond reasonable doubts. By doing this, the interest of parties to future transactions is also secured. It is in the nature of corroboration or confirmation of certain facts, which are usually recited in the document itself. The Confirming Party in effect, gives an implied assurance that the contentions, usually of the transferor and at times of others or parties to document are true and correct and is normally stopped from questioning the same at a later date.

It is to be noted that the Confirming Party usually does not receive any consideration though at times, specific amounts are paid out of the consideration, as per the instructions of the party concerned. The Confirming Party is rather obliged or comes forward to be bound by the terms of the document owing to a peculiar position as relating to the property or other parties to the document.

A Confirming Party is also made a party to the document at times to give a confirmation in the form of declaration that certain statements contained in the deed are true and correct. The basic idea of joining the Confirming Party is to ensure that certain issues do not arise at a later date. The Confirming Party steps in so that mere reading of the document satisfies certain queries and doubts. Joining of the Confirming Party in certain circumstances definitely improves the intrinsic strength of the document itself to operate as conveyance or a transfer deed.

It is to be noted that the Confirming Party by himself or herself does not have any interest in the property. If such a person has an interest, then they should figure as transferors as such interest needs to be conveyed. It is only in cases where there is no interest, but a doubt may arise as to whether a person can have interest, then such a person is made as a Confirming Party.

The wordings as relating to the Confirming Party, should be proper and clear as otherwise, there are implications of additional or even double stamp duty and registration charges being levied. There are also chances that the issue of capital gains, among other issues, may arise. It is to be noted that witnesses to a document are not confirming parties in the sense that a witness may or may not know the contents of the document. On the other hand, a Confirming Party, except in certain extreme situations, cannot take a stand that he or she does not know the contents of the document.

At times, parties are added as Consenting Parties to the document. The effect is much the same as a Confirming Party except that consent implies that the circumstances have been weighed by the person concerned and a decision taken on such consideration of the facts and circumstances. It implies a better degree of knowledge relating to facts than is required for a Confirming Party, though these terms are also used interchangeably. Consent connotes that the Consenting Party is giving permission and that he or she allows certain benefits or rights to be conferred on the party concerned.

It is to be noted that situations may arise when the Confirming Party though willing to sign the document, may not be willing to appear for registration. In such cases, separate and suitable documents can be obtained from the Confirming Party, as registration is not mandatory. These separate documents should be drafted appropriately and the risks of the Confirming Party assailing the validity of such a document later should also be taken into account.

Deeds of confirmation are also obtained from parties as a confirmation of facts particularly, relating to payment of consideration, handing over of possession, etc. However, the transferor and the transferee can also execute these deeds as well. At times, Confirming Parties join execution of documents for rectification of certain errors, which have not been rectified till the relevant point of time. Confirming Parties also join execution of rectification deeds, ratification deeds and correction deeds in order to better assure the title of the transferee.

There are times when trouble can arise by approaching parties for the purposes of joining them as executants of documents in one capacity or other, as it may rise to non- existing and notional rights. One may also unwittingly stir the hornet’s nest or open the Pandora’s box in trying to obtain signatures and documents from all persons, whether it is necessary or not. It is therefore advisable to ensure that first of all there is absolute necessity in joining a person as a Confirming Party and also ensure that the wordings in the document are proper and clear as otherwise, it may result in a confirmation of problems for oneself.

The author is partner, RANK Associates, Advocates, Chennai.

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